The banks own the debt and will try to syndicate it out to new investors later. This is standard in an LBO. The banks provide "bridge financing" for the deal while they line up end debt investors. But the banks are ultimately on the hook if the debt market freezes up, as happened here.
ETA: Financing the Merger section of the proxy lays all this out:
Pursuant to a debt commitment letter (which we refer to as the “debt commitment letter”), Morgan Stanley Senior Funding, Inc. and the other financial institutions party thereto committed to provide to Acquisition Sub (which we collectively refer to as the “bank debt financing”):
• a senior secured term loan facility in an aggregate principal amount of $6.5 billion;
• a senior secured revolving facility in an aggregate committed amount of $500.0 million;
• up to $3.0 billion in aggregate principal amount of senior secured bridge commitments (which commitments may be replaced by the proceeds of the issuance of one or more series of senior secured notes (in escrow or otherwise) pursuant to a Rule 144A offering or other private placement, as contemplated by the debt commitment letter); and
• up to $3.0 billion in aggregate principal amount of senior unsecured bridge commitments (which commitments may be replaced by the proceeds of the issuance of one or more series of senior unsecured notes (in escrow or otherwise) pursuant to a Rule 144A offering or other private placement, as contemplated by the debt commitment letter).
This is why banks always take it in the shorts really badly during downturns. They’re always chasing yields and behind the curve while being in the stereotypical ‘conservative’ financial position of low information about how anything actually works.
I’m amazed we haven’t had several high profile ‘jumped out of window’ events related to this already. Seriously, who thought it was a good idea to sign off in this from the financier side?
tbh i've heard quite a few CLOs are sitting with warehouses now open for upwards of 200 days, so MS may just be waiting for them to get desperate to fill up so they don't take so much of a haircut. my guess is the overall prime to sub-IG spread isn't going to be moving down, but this is kinda an advantage for illiquid 144a offerings.
ETA: Financing the Merger section of the proxy lays all this out:
https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
Pursuant to a debt commitment letter (which we refer to as the “debt commitment letter”), Morgan Stanley Senior Funding, Inc. and the other financial institutions party thereto committed to provide to Acquisition Sub (which we collectively refer to as the “bank debt financing”):